Virginia Healthcare Laws Face Scrutiny

In Virginia, healthcare providers must prove that a medical service is needed and get a certificate of public need (COPN) before they can acquire new medical technology or offer the service. Many see this certificate as a “special permission slip from the government.” There is a movement in Virginia to try to change these laws.

On December 10th of 2015, the Fourth Circuit Court of Appeals heard the oral arguments for a multi-year legal battle between Dr. Mark Baumel and the Commonwealth of Virginia. Dr. Baumel maintains that the laws known as Certificate of Public Need (COPN) are keeping him from providing life-saving colon cancer screenings. Ultimately, the Fourth Circuit Court of Appeals ruled in favor of Virginia, further bolstering the validity of Certificates of Public Need.

Long CON

Virginia’s healthcare laws, like 35 other states, have rules called Certificate of Need (CON) laws. Basically, these laws require that physicians or healthcare providers receive a license from the government before they can purchase new equipment to offer new services. If a doctor’s office wants an MRI machine, it first must get approval from the government before they can buy it. According to the Heartland Institute, CON laws were intended to prevent high healthcare prices and limit the excess of duplicate services within the state.

For some, though, CON laws look far different in practice. Research from the Henry J. Kaiser Foundation shows that these laws usually force consumers to pay more for healthcare by suppressing competition and force providers to rely on antiquated equipment in outdated facilities.

CON laws stand out from other licensing legislation in that they do not require quantifiable data for decision-making. A healthcare provider can’t produce data showing a public need for an MRI machine and get a certificate. A government board decides whether an MRI machine is needed and then grants or denies the provider the permission to buy it.

Virginia mandates a certificate of public need for acquiring a slew of new medical devices. This process can take six to seven months and culminates in a hearing where competing service providers can testify against those seeking the certificate. In Dr. Baumel’s case, he wanted to purchase CT scanners to provide an innovative colon cancer screening. However, to purchase the scanners, he needs a Certificate of Need from Virginia’s Department of Health.

Adding to the inconvenience, only the Department of Health decides whether a public need exists for the project before issuing a COPN. Even though applicants can appeal the DoH’s choice to the circuit court, many hopefuls decide to forego the lengthy and costly process altogether.

Negative Side-Effects

The Federal Trade Commission and Department of Justice Antitrust Division teamed up to devise a cautionary statement that they delivered to Virginia’s Certificate of Public Need Work Group. The Work Group is responsible for examining the process, determining how it shapes healthcare in the state, and suggesting specific solutions to solve identifiable issues. Together, the FTC and DOJ “respectfully suggest that the Work Group and General Assembly consider whether repeal or retrenchment of Virginia’s COPN laws would best serve its citizens.”

In many cases, COPN laws increase the price of entry for healthcare facilities, making it harder for them to provide high quality services at a low cost. As a result, the provisions discourage inexpensive, inventive, and high-value healthcare. The National Law Review backs up the FTC’s and DOJ’s assertion that the laws delay the market’s responsiveness to consumer needs, like cost and treatment, and discourage firms from using new and better services.

According to Institute for Justice Attorney Robert McNamara, the COPN program “is nothing more than the government’s permission slip to compete, amounting to a certificate of monopoly for favored established businesses. Patients and doctors—not the government—are in the best position to decide what medical services and equipment are needed in Virginia.” Fellow IJ Attorney Larry Salzman asserts that Virginia’s COPN laws, which he refers to as “outdated relics,” are the most restrictive of any state in the U.S.

Silver Lining

In the State of Virginia, however, these laws remain on the books after the Fourth Circuit Court of Appeals ruled against Dr. Baumel. Fierce opposition remains, as voices speak out against COPN laws and state legislators introduce new bills to change the old laws.

Fortunately, regardless of whether the Certificate of Public Need Laws are reformed or maintained, there are options for Virginians. SingleCare can help those struggling to find low-cost, high-quality healthcare by connecting patients with affordable providers. For Virginians, there’s always a good option.